EV Sales Slowdown Leads to Cost Cuts and Job Losses

The S&P Global Mobility AutoIntelligence service provides daily analysis of global automotive news and events. We deliver timely context and impactful automotive insights to navigate the fast-moving industry. Behind the Headlines offers a bi-weekly dive into recent top stories.

Automakers and suppliers are continuing to navigate a slowdown in the pace of battery electric vehicle (BEV) sales. In third-quarter 2024 earnings reports, the industry focused on cost reductions due to shrinking margins and earnings, rather than addressing a quarterly loss.

As a result, they are curtailing and delaying production plans, as well as increasing their announcements of job cuts, temporary redundancies and closed facilities.

Automotive News reported that suppliers have announced more than 50,000 job cuts in 2024, including Bosch, Continental, Forvia, Michelin, Schaeffler, Valeo, and ZF.

Some cuts will take effect through 2028 as these companies adjust manufacturing capacity as well as engineering and other support functions. "The main problem for our industry is the ramp-up of electromobility, which is much too slow," said Matthias Zink, president of European supplier lobbying group CLEPA and head of automotive technologies at Schaeffler, according to Automotive News. "The greatest impacts on employment are probably still ahead of us."

The global automotive market is affected by costs and pace of the transition to BEVs, as well as regional challenges:

• In Mainland China, an ongoing price war is undermining the market.
  
  
• The European market is struggling with the likelihood that it will not recover to historic volume levels, as well as slowing BEV demand and increasing regulatory pressures.
  
  
• The US market could have some opportunity if the incoming presidential administration eases emissions and fuel economy regulations, although that scenario does not alter the need for lowering manufacturing costs, given existing investments.

Should regulations loosen, BEVs will be slower to gain profitability due to a lower-than-expected ratio of BEVs to other vehicles in the market. At the same time, automakers will be required to fund ongoing investment in and support for internal combustion engine (ICE) vehicles.

The delays and reductions in BEV capacity investments also have a knock-on future impact. Automakers put plans in place based on profitability assumptions; the longer it takes to reach the planned capacity targets, the greater and more prolonged impact there is on margin and earnings.

As difficult as these changes are, cost control moves will support automakers' long-term trajectory and prevent losses.

Volkswagen considers plant closures in Germany

Volkswagen (VW) is looking for cost savings of €4 billion and making moves toward closing plants in Germany, something it has never done. VW has concluded it needs to adjust its regional manufacturing footprint to the realities of a smaller European market. Volkswagen's Audi division also announced in November plans to cut 2,000 jobs.

Stellantis implementing cuts in North America and Europe

Stellantis has cut jobs and temporarily halted production in its North American region to reduce costs. In Europe, they've done the same in France and Italy. In Spain, they are reducing the number of production days and working hours.

Stellantis, however, has also been subject to significant sales declines in its key regions, sometimes more than other automakers. Former CEO Carlos Tavares stepped down on Dec. 1, 2024, and a successor search is underway.

Ford hit harder by BEV sales slowdown in Europe

Ford job cuts and manufacturing slowdowns have affected European operations more than those in North America. Ford is looking to reduce costs and BEV production to better match demand.

The company is cutting 4,000 jobs in Europe by the end of 2027 and has cut working days at its Cologne plant to adjust for weaker BEV demand than the company had anticipated.

Its Valencia, Spain, plant is seeing reduced working times and offering redundancy packages.

General Motors and Nissan announce global job cuts

General Motors cut 1,000 salary and hourly employees globally on Nov. 17, 2024. The company also cut 1,000 employees from its software teams in August 2024, delayed installing BEV capacity and in December 2024 sold its stake in a BEV battery plant under construction to its joint-venture partner.

Nissan will cut 9,000 jobs globally and reduce global production capacity by 20%. The company is looking to lower fixed costs by ¥300 billion and variable costs by ¥100 billion compared with fiscal year 2023-2024 (ended March 31, 2024).

BYD looks to suppliers to reduce costs

BYD has not announced job cuts but has asked suppliers to reduce prices by 10% to meet its own cost-reduction targets. BYD expects increased competition in the mainland Chinese new-energy vehicle (NEV) sector in 2025 and aims to strengthen its competitiveness through continuous cost reduction measures.

The increasing number of cuts and cost reduction activities reflect the impact of current conditions on earnings and cash flow, as well as the reality that the capacity planned and installed for a transition to EVs is simply not needed to meet today's demand.

Though total EV sales continue to grow, a deeper transition required by regulations does not align with consumer preferences in many markets.